Memo on World Trade Organization

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Following the Briton Woods Conference of 1944, International Trade Organization was formed to regulate international trade. This body was to establish rules and regulations for trade between all member countries (WTO, 2008). The United States did not welcome the formation of International Trade Organization (hereinafter, ITO) although it was passed in the UN summit. The fears of the US were that the body would regulate trade rather than liberate it in the international market. Under ITO was the General Agreement on Tariffs and Trade (GATT) which led to the establishment of WTO as its replacement. WTO was charged with the regulation of international trade and expanding it to all international markets because of its strong institutional structure (Stager, 2010).

WTO administers international trade by implementing its operational agreements and multilateral trade agreements. WTO also provides a framework for the implementation and administration of plurilateral trade agreements. In addition, WTO offers a forum for negotiations amongst its members in their multilateral trade (Footer, 2006). Moreover, WTO monitors national trade policies through the administration of both national and international policies. Apart from these, WTO offers forums for training in international business and a channel for cooperation with other international bodies in the administration of business (Bansal, 2007).

When a country adopts a trade policy that is considered to violate international trade agreements, another can take up a dispute with it in WTO. A country can also take dispute to the WTO if a fellow member of WTO fails to live up to the obligations of international trade agreements (WTO, 2009). In such cases, multilateral systems are used to solve the dispute instead of them being taken unilaterally. A trade dispute can also arise when one country tells the other trade partner what its environmental regulations should be. This might not always be taken positively by the business partner leading to a trade dispute (Luo, 2010).

Example of Trade Dispute

Philippines is an example of a country that has been locked up in several trade disputes in the international market (WTO, 2009). For instance, the brand DS371 was formerly designated as Thailand-Customs and Fiscal Measures on Cigarettes from the Philippines. In addition, Philippines has filed two cases against Australia on products DS270 AND DS271 (WTO, 2009). These cases are highly rated because the third party complainant joined the United States in filing cases against the Philippines in their Whiskey production. The dispute has millions of Dollars of trade attached to it. The cause of dispute is that Philippines excise tax on distilled liquor is discriminated against imports and only favors its domestic products. Furthermore, Thailand cigarette complain is that Thailand discriminates against cigarettes imported from Philippines. These allegations are based on the fact that cigarettes from Thailand would cause over 95% negative effect on Philippines cigarette exports (WTO, 2009).

The settlement of the dispute begins with consultations. The consultation stage is made at a domestic level and can only proceed to the WTO council after hitting a dead end. In case of failure by the consultation parties to reach an agreement, a panel is created with the view of ensuring the independence of the members (Luo, 2010). This panel consists of a member from each disputing side and two members of the council. The panel first put into consideration the interest and rights of each member. In the case between US and Philippines, Thailand and China came as third parties with written submissions (WTO, 2009). Because the EU had already filed same complaints against Philippines, the WTO asked Philippines to reconsider its tax procedures to allow international trade without dispute. The US at the same time had to ensure that the domestic market of Philippines is maintained by regulating its exports to Philippines (Bansal, 2007).

An evaluation of the WTO's overall progress toward its Goals

World Trade Organization has played a major role in giving developing countries an opportunity to gain a larger share in the global market. Because of stiff competition in the global market, WTO has initiated Aid for Trade Initiative to support developing countries gain a reasonable share of the market (Luo, 2010). WTO does this by providing members states with both financial and technical assistance. WTO has helped developing countries build up their supply side capacity and boost their trade related infrastructure with an aim of improving production and advancing trade (WTO, 2008). In addition, the launch of Aid for Trade by the WTO has helped in facilitating the mobilization of international resources aimed at improving trade in developing countries. Aid for trade has also facilitated international resources for developing countries to counter supply-side constrains and to reduce trade related restrictions (Footer, 2006).

WTO has partnered with other international organizations to support the realization of Millennium Development Goals (MDGs). This has been achieved by WTO helping developing countries increase their market share in the international market. This move has helped countries come closer to achieving their development aspirations (Stager, 2010). Moreover, WTO serves as platform for action for large number of actors such as International Organizations, Development Banks and Civil societies. Through WTO’s periodic meetings it evaluates the progress of Aid for Trade focusing on its objectives (WTO, 2008).

World Trade Organization has also been in the forefront in providing capacity development to developing countries. WTO has therefore provided comprehensive set of programs to improve technical expertise, legislative and regulatory framework in international trade. It has also initiated short term assistance in providing physical infrastructure that is very critical in supporting trade in most emerging economies in the world (WTO, 2008).